Capital Gains Tax Relief Strategies Within Super

Understanding CGT and Why It Matters

Capital Gains Tax (CGT) is one of the most significant taxes Australians face when growing wealth through investments. Whether it’s shares, property, or managed funds, selling these assets at a profit usually attracts CGT. For high-income earners, the rate can be as high as 45%.

But there’s a smarter way to manage this tax. By using your superannuation fund as the investment vehicle, you may unlock strategies that either reduce or eliminate CGT. Over the course of your working life, this can mean more money compounding for your retirement.

How CGT Works Inside vs Outside Super

Let’s break down the difference:

• Outside Super
• Gains are taxed at your marginal rate (up to 45%), minus a 50% discount for assets held longer than 12 months.
• Inside Super (Accumulation Phase)
• CGT is capped at 10% for assets held more than a year.
• Inside Super (Retirement Phase)
• Gains may be completely tax-free if the fund is supporting a pension account within the transfer balance cap.
  

This structure shows why many Australians move assets into super: the tax savings are clear.

Key CGT Relief Strategies

1. Contributing Assets to Super

Certain assets — like listed shares and business real property — can be transferred directly into super. This process, called an in-specie contribution, effectively resets the cost base of the asset inside the fund.

• If done correctly, future growth may be taxed at just 10% (or even 0%).
• Care is needed to avoid exceeding contribution caps.
  

2. Using the Small Business CGT Concessions

Business owners selling their business have access to special concessions:

• 50% active asset reduction.
• 15-year exemption if you’ve owned the business for 15 years and are over 55.
• Retirement exemption: up to $500,000 can be contributed into super outside normal caps.
  

This is one of the most powerful ways to boost retirement savings tax-effectively.

3. Downsizer Contributions

From age 55, you can contribute up to $300,000 each from the sale of your main residence, regardless of work status or contribution caps. For couples, that’s $600,000 combined.

While not technically a CGT concession, this rule lets you move large amounts into a tax-free retirement environment, softening the impact of selling a family home with a partial CGT liability.

4. Timing the Sale Around Retirement

If you’re close to retirement, the timing of a sale matters. Selling an asset just before starting a pension account may result in tax. Waiting until after the pension begins could mean the gain is tax-free.

Example:

• Jane, aged 59, has $1.5 million in super and is about to retire.
• If she sells her shares while in accumulation phase, she’ll pay 10% CGT.
• If she waits until she starts a pension, no CGT may apply at all.

Common Mistakes to Avoid

• Exceeding Contribution Caps: Triggering penalty tax by contributing too much at once.
• Ignoring Liquidity: Moving assets into super without enough cash flow to fund pensions.
• Overlooking Estate Planning: Tax outcomes for beneficiaries may differ depending on how assets are structured.

Super vs Non-Super CGT Planning

Sometimes, keeping assets outside super makes sense:

• When contribution caps restrict transfers.
• If you need access to funds before preservation age.
• When estate planning requires flexibility.
  

A blended approach — with assets both inside and outside super — often delivers the best outcome.

Why Professional Advice is Essential

The ATO rules on contributions, exemptions, and timing are complex. A small misstep can wipe out the benefit. Strategic Planners help by:

• Running projections on CGT outcomes under different scenarios.
• Advising on eligibility for concessions.
• Coordinating with accountants to align strategies with your broader tax plan.

The Bottom Line

Capital Gains Tax can erode wealth if ignored. Superannuation provides some of the most effective relief strategies available, from concessional tax rates to powerful exemptions.

With the right planning, you can:

• Protect your retirement savings.
• Legally reduce or eliminate CGT.
• Ensure your wealth works harder for you.

Speak to an RJS Wealth Management Strategic Planner today to review your assets and unlock CGT strategies within super.

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